Bill Gates and Kinder Capitalism

by Thomas Riggins / January 28th, 2008

Bill Gates gave a speech at Davos in which he is calling upon the capitalists of the world to be kinder and to help the poor. But only if they can make a buck. So reports the Wall Street Journal in an article by Robert A. Guth (1-24-08) from which all the direct quotes by Gates and others have been taken.

Gates says that “We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well.” Those aspects are the exploitation of human labor power and the extraction of surplus value from workers. It will be a nice trick to see how this will happen.

Gates wants to further what he calls “creative capitalism” and use the technological revolution to help the poor of the world. “The rate of improvement for the third that is better off,” he stated, “is pretty rapid. The part that is unsatisfactory is for the bottom third — two billion of six billion.”

He at least concedes capitalism has left behind two billion people. The number may be greater than that. Other experts think that the figure should be four, not two billion — i.e., a bottom two thirds (C.K. Prahalad from the University of Michigan).

The “free” market, the cause of this misery of the poor, will be used to help the impoverished billions out. Don’t panic capitalists! Your role is to design products and systems that help the poor AND make a profit for yourselves at the same time! “Such a system,” Gates tells us, “would have a twin mission: making profits and also improving lives for those who don’t fully benefit from market sources.” But you can be sure, no profit, no benefit.

Is this a realistic plan? “The idea,” he says is “that you encourage companies to take their innovative thinkers and think about the most needy — even beyond the market opportunities — that’s something that appropriately ought to be done.” But this is just not how the market works, not the way globalization operates. While company X is using its resources “beyond market opportunities” company Y moves in and takes the market share that X failed to appropriate. Gates sounds good, and has set up big aid programs, but all this won’t make a real dent in the poverty caused by monopoly capitalism.

The WSJ quotes a critic of this utopian scheme, a past economist at the World Bank and now a teacher at NYU, William Easterly, who is quoted as saying, “There’s a lot of people at the bottom of the pyramid but the size of the transactions is so small it is not worth it for private business most of the time.” This means most of the poor will stay poor. Easterly wrote a book in 2006, the Journal reports, The White Man’s Burden, in which he maintains that even though $2.3 trillion has been expended in foreign aid in the last 50 years nothing much was really accomplished for the masses of the world’s poor.

Gates is reported to dislike this book and to have publicly “snapped” at Easterly for his criticisms. Easterly rejoined that, “The vested interests in aid are so powerful they resist change and they ignore criticism. It is so good to try to help the poor but there is this feeling that [philanthropists] should be immune from criticism.”

Bill Gates is not deterred. He says that “If we can spend the early decades of the 21st century finding approaches that meet the needs of the poor in ways that generate profits for business, we will have found a sustainable way to reduce poverty in the world.”

Again the stress on capitalist profits, without which we can’t be rid of poverty. But business can’t even keep its own workers employed, even when it make profits. In fact it sometimes fires its own workers in order to increase its profits. Can we really think that capitalists will forego opportunities to maximize profit margins just to help the poor. I don’t question Gates sincerity but If he is really committed to ending poverty I suggest he spend less time reading Adam Smith and more reading Karl Marx.

3 comments on this article so far ...

Gates clearly does not (can’t/won’t) understand economics, and specifically capitalism. He does understand how to make a buck. As I recall, the operating system “he” licensed to IBM that ultimately made him a billionaire (try this, his family has the wealth of the combined income of 45,000,000 of the poorest Americans in the USA) was a rip-off of CPM operating system that he did not develop. What’s done is done…

The concentration of wealth that he enjoys is mostly unearned.

Gates is part of the Jeffrey Sachs, Thomas Friedman, Bono crowd that clearly don’t understand poverty and conflict. The problem is they are the pre-dominate world view that must go…

Truthdig has a great review by Chalmers Johnson of a book by Ha-Joon Chang called “Bad Samaritans”. Chang nails the issue and in doing so debunks the corporatist views of Mr. Gates. It is the heel of Western/American imperialism ala neoliberal foreign policies which has subverted the very thing it claims to be promoting. The emphasis though is not in “uplifting” the poor, but finding a way to make a profit by doing what will sustain poverty. This is not to say that Gates wouldn’t like poverty to vanish, but that the priorities are clear and his remedy undermines his “moral” sounding concern.

Johnson’s review indicates a deep understanding on the part of Chang of what causes poverty and thereby what can undo it.

I’ll take Bill Gates entrepeneurial ideas over the ideas of any foreign aid by governments. Private Charities and Third World Entrepeneurship have a very good track record. Government handouts, by comparison, have a lousy track record. They have a tendency to end up in the hands of third world dictators, who use the money to buy weapons.

Private charities, however, have been proven to far more efficient with their resources. Far less corruption is involved. Things are managed much more locally.

Entrepreneurial quests to help the poor is even better. Because there is an opportunity to make a profit, many more people are likely to get involved, and keep coming back. Even completely selfish people get involved because of the profit motive.

My only criticism of Gates is that he blamed free market capitalism on all this. For the person who said that Gates misunderstands economics, that criticism is correct, but not in the way that the critic intended. The fact is, the nations which have the least free economies are the ones with the highest percentage of poor people. Socialism is alive and well in the third world. If you do not believe me, the nations that have been allowing more market activities are the ones who experienced growing middle classes. What Gates should have said is that a LACK of free markets are the cause of too much poverty.